On December 23 the Ministry of finance of Kazakhstan intends to repay the rest amount of MEAKAM-120 in advance for the face value of KZT14,254.8 m

/IRBIS, December 13, 03/ - Today the Ministry of finance of Kazakhstan informed that on December 23, 2003 it intends to make an advance repayment of the rest of state special treasury bonds MEAKAM-120 of the first issue (KZ6AK3112A74. KASE code - MAM120.001; KZT1,000; KT36,850.4 m, January 5, 98 - December 31, 07, semiannual coupon 9.75%APR) with volume of 14,254,758 bonds on face value. The Ministry of finance made advance repayment of MEAKAM three times. On December 25, 2002 5,186,367 bonds was repaid on face value, On December 31, 2003 - 5,000,000 pieces and on November 28, 2003 -10,000,000. Last changes to "Rules on procedures of issuing, circulation and repayment of special state treasury bonds of the Republic of Kazakhstan", which provides for advance repayment of MEAKAM, were adopted by resolution of the government of Kazakhstan dated April 2, 2001 #437. At present time, current market price of MEAKAM at secondary market of Kazakhstan Stock Exchange (KASE) accounts for 112.9% of face value in clean price terms, or KZT1,174.44 per bond taking into account accumulated interest (weighted average indexes by trades results on December 12 are cited). It is likely that professional market participants negatively responded to news about advance repayment of bonds on face value. Many investors purchased these securities expecting that their prices will go up, as currently the Ministry of finance does not issue long-term bonds with such a high coupon. Market participants used to accept previous advanced repayments of MEAKAM easy, because the Ministry of finance was repaying bonds included in a loan portfolio of the National bank (the information has been affirmed in the Ministry of finance). Planned repayment can significantly affect interests of institutional investors of the republic. No official comments that could prompt the Ministry of finance to conduct advance repayment of its bonds under conditions of budget surplus and stubborn struggle of the National Bank with excess funds at financial market, were not made. It should be noted that rapid increase of the Ministry of finance's issuing activity in December (during 13 days borrowing through MEOKAM issue reached KZT18,158.2 m) may discourage negative influence of advance repayment of the rest MAKAM on inflation rate. Most likely, we should relate advance repayment of MEAKAM should to borrowings of large volumes, made by the Ministry of finance during the last month of the year. [2003-12-13]